Nontariff measures and product differentiation: Hormone-treated beef trade from the United States and Canada to the European Union

We investigate how a combination of the sanitary and phytosanitary (SPS) measure and product differentiation affects beef trade and the consequences for the United States (US)–European Union (EU) hormone-treated beef trade dispute. We develop a partial equilibrium model to represent the global beef markets and product differentiation between non-hormone-treated beef, hormone-treated beef, and other beef. The results show that removing the SPS measure increases EU hormone-treated beef imports from the US and Canada and decrease beef consumption. In addition, EU hormone-treated beef consumption and imports can be related to a few key indicators of product differentiation. The framework we develop can estimate EU hormone-treated beef consumption and imports based on a minimum of parameters relating to product differentiation, thereby providing useful applied economic analysis of a key trade measure.